Google / AOL Deal Coming Tomorrow?

By Scott

Reports are that tomorrow (Tuesday) AOL Time Warner will announce a billion dollar deal with Google, where Google will buy 5% of AOL Time Warner.

AOL is Google’s largest customer, and represented 10% of Google’s revenues for the first 9 months of this year. Up until a week ago, it looked like Microsoft was going to win the deal with AOL, which would have been a big blow to Google. In the end, Google is poised to win out.

The details are sketchy, but apparently terms of the deal include:

– Google Ads will continue to be shown to users
– The AOL sales force will have the ability to sell Google Ads
– AOL’s online properties will be promoted through Google’s sponsored search ads

Apparently, some of the deal-breakers for MSN were:

– AOL engineers questioned how good MSN’s new pay per click software was, suggesting that DoubleClick’s software was better
– Microsoft would not contribute a new service it’s developing to the deal,

When all is said and done, this deal would be a huge blow to Microsoft.

Concerns? I’m concerned about the precedent that will be set by Google bundling in AdWords advertising into the deal. Hopefully AOL will still have to follow the same rules as all other advertisers. If not, an uproar may ensue.

Another concern that requires some analysis:

I wonder what percentage of AOL’s search traffic comes from their website, versus their software pushing people to use AOL search. If most of this search traffic comes from AOL software, not the online presence, than a spin-off may actually be a negative for Google. Perhaps that is one of the reasons they bought a small stake in the whole company, and why has yet to be spinned off.

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